India has launched a previously announced jet fuel price-stabilisation scheme for local airlines, with aviation turbine fuel to be sold to carriers at a fixed price of 115 rupees ($1.21) per litre, 10% higher than previous prices, three industry sources said. Here are some details about the scheme:
If airlines join the scheme they will have to pay the fixed price of 115 rupees/litre for up to three years, even if global prices decline, as the extra payment will be used to replenish the fund.
Airlines that do not opt in to the scheme will continue to pay market-linked prices, which may be higher or lower than the fixed price.
Indian airlines have so far not joined, two of the sources said.
Earlier this month, India approved the 100-billion-rupee fund for the scheme, amid rising costs linked to the Iran war.
The support will be provided in the form of interest-free advances to oil marketing companies to cover under-recoveries – the gap between market-linked jet fuel prices and the moderated rates charged to airlines.
Jet fuel prices account for up to 40% of airlines’ operating costs.